Tiered and narrow networks are increasingly popular cost-savings health plan structures — when done right.
And critical headlines of tiered networks are not unique to New Jersey.
That was the all-encompassing message from panel discussions at Princeton University on Thursday during the New Jersey Health Care Quality Institute’s “Fear of Tiers” event.
“The two issues that are going to be the hardest to resolve are the definition of what is quality and what are the factors, and the second is what is something that should be disclosed versus what is the secret sauce or proprietary,” said institute CEO and President Linda Schwimmer.
Tiered networks have become a controversial topic since the September rollout of Horizon Blue Cross Blue Shield of New Jersey’s OMNIA Health Alliance and health plan — though it was not the first in the state to offer such a plan.
United Healthcare was first in 2008, said Larry Downs, CEO of the Medical Society of New Jersey.
State legislators have recently introduced three bills to plug what some perceive as regulatory leaks in the system for approving tiered networks.
Although the conversation didn’t focus on the “the O-word” — as Sen. Joe Vitale referred to Horizon’s OMNIA plan at the event — some of the controversy surrounding OMNIA was addressed during the panels.
As Schwimmer noted, panelists had different ideas of what quality standards should be — ranging from reports like the independent and nationally recognized Leapfrog safety scores to government standards such as the Centers for Medicare & Medicaid Services.
Downs said there should be a quantifiable standard based on patient outcomes, such as a patient’s range of motion after a procedure or how quickly the patient returns to work.
Leapfrog CEO Leah Binder said that the size of a health system doesn’t always equate to the best in quality, which is a key discussion in the controversy in New Jersey.
One of Vitale’s biggest concerns is the increased competition by the tiers in their current structure. The tradeoff for those participating in the top tier, which include some of the largest health systems, is reduced rates for higher volumes of patients — the latter of which is a finite number compared with the former.
But for all the criticism, some are thrilled to have the tiered networks available.
“We have been crying for tiers for 30 years,” said panelist Jack Sullivan, with the N.J. Carpenters Fund.
Ward Sanders, who leads the New Jersey Association of Health Plans, said that there are many quality health systems in the state and the competition in tiered networks has to exist by definition, because “it really isn’t a tier if everyone is in it.”
But there are examples around the country where tiered networks have worked well, especially with annual evaluations of included health systems.
Kate Ho, an associate professor of economics at Columbia University, said that tiered networks can have significant market impacts.
Citing several studies in the past few years, Ho said that when cost incentives caused a shift in enrollment, there was no evidence of quality reductions, but patients were willing to travel further to get to a hospital.
Cynthia Jay, with Health Republic of New Jersey, said the event should have had representatives from the insurance industry to shed more light on the topic.
“Tiered networks are here to stay as long as there is a cost advantage from consumers, insurers and other stakeholders seeking to relieve costs. Certain consistent quality outcomes also need to drive strategy around network development,” Jay said. “Although there was a good representation of stakeholders, input from an insurer on the state panel may have enabled us to explore insights around perspectives of tiers more in depth."
Representatives of Horizon, Aetna, Health Republic and AmeriHealth New Jersey were among attendees of the event.